Correlation Between Sterling Construction and STILLFRONT GRP
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and STILLFRONT GRP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sterling Construction and STILLFRONT GRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and STILLFRONT GRP AB, you can compare the effects of market volatilities on Sterling Construction and STILLFRONT GRP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sterling Construction with a short position of STILLFRONT GRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and STILLFRONT GRP.
Diversification Opportunities for Sterling Construction and STILLFRONT GRP
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and STILLFRONT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and STILLFRONT GRP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STILLFRONT GRP AB and Sterling Construction is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sterling Construction are associated (or correlated) with STILLFRONT GRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STILLFRONT GRP AB has no effect on the direction of Sterling Construction i.e., Sterling Construction and STILLFRONT GRP go up and down completely randomly.
Pair Corralation between Sterling Construction and STILLFRONT GRP
Assuming the 90 days horizon Sterling Construction is expected to generate 0.9 times more return on investment than STILLFRONT GRP. However, Sterling Construction is 1.11 times less risky than STILLFRONT GRP. It trades about 0.13 of its potential returns per unit of risk. STILLFRONT GRP AB is currently generating about -0.04 per unit of risk. If you would invest 2,980 in Sterling Construction on September 2, 2024 and sell it today you would earn a total of 15,330 from holding Sterling Construction or generate 514.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. STILLFRONT GRP AB
Performance |
| Timeline |
| Sterling Construction |
| STILLFRONT GRP AB |
Sterling Construction and STILLFRONT GRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and STILLFRONT GRP
The main advantage of trading using opposite Sterling Construction and STILLFRONT GRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, STILLFRONT GRP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in STILLFRONT GRP will offset losses from the drop in STILLFRONT GRP's long position.| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
| STILLFRONT GRP vs. Nintendo Co | STILLFRONT GRP vs. Sea Limited | STILLFRONT GRP vs. Superior Plus Corp | STILLFRONT GRP vs. NMI Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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